Tesla is riding a wave at the moment.
The electric vehicle maker’s stupendous rally in recent months has given shareholders something to cheer about, cost short sellers billions of dollars and vindicated legions of retail investors who have long adored Elon Musk’s company.
Tesla shares have soared by nearly 320% since early June, helped by the company’s better-than-expected financial results and ramped-up production at its new car factory in Shanghai.
After surging 36% over Monday and Tuesday, the stock by Friday had settled back to a gain of about 15% for the week. On Friday afternoon, it was down marginally at $747.11.
Another factor driving this week’s surge may be fund managers hurrying to raise their allocation of the stock, analysts said.
‘A lot of advisors and institutions, they jump in the bandwagon because they don’t want to trail,’ said vocal Tesla bull Ross Gerber, president and chief executive of Gerber Kawasaki in Santa Monica, California. ‘If Tesla goes to $1,000 and they don’t own it, what are they going to tell their clients?’
Tesla’s biggest winner is of course Elon Musk, who stands to earn more than $1 billion thanks to Tesla’s recent rally.
In November last year, Musk brutally slapped down one of his arch-enemies: an investor who tries to earn money by betting against Tesla’s success.
The billionaire has often complained about short-sellers who want his pioneering electric car firm to fail so they can make vast amount of dosh.
Short-selling involves borrowing stock in a company and then selling them in the hope the price will collapse, whereupon the stock can be brought back cheaply and handed back to its owner, leaving behind a tidy chunk of profit.
But in light of Tesla’s soaring share price this strategy has proved a failure.
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